FPA, on behalf of Invesco Aim, we appreciate the opportunity to speak in your event. Because of the amount of questions, I copied all of the questions and will respond below in bold to each question separately.
Brenda writes: Is this same pool of money used for disability benefits? This seems to be a large strain as people and their children qualify after having added so very little to the system.
Brenda, yes the same pool is used for disability benefits.
Gulzar comments: Why not send every recipient a statement of cumulative benefits received every year when each is sent his/her Form SSA 1099? This will alleviate the misconception that you r getting back what you put in. Most people receive far more than they have put in.We need to make clear to recipients that the SS benefits, no matter what label you give it, is another transfer of wealth. This is apparent from the way AIME is calculated. This transfer is from those who earn the most, the top 20% of tax payers who already pay currently over 67% of federal income taxes, to those who do not earn much. In this respect SS is a "social" insurance not an "actuarial" insurance program. This means that the top 20% pay the cost of government during non retirement years of 80% of people, and then do the same during the retirement of the same 80% of the people. The real question is why and to what extent should we tax the top 20% earners-workers to pay for the cost of government and for the retirement of the lower earning 80%? Is this a progressive or punitive regime?
Not a bad idea, but you must keep in mind that Social Security benefits are not maintained in separate accounts for the benefit of each individual. As you mentioned, the participant will not receive an equal dollar amount of what they contributed.
Anita writes: You mentioned what Obama's proposal is. Do you know what the other two candidates are proposing? And who (what economist or instituion) is advising each of them?
As is stands today, John McCain is proposing making adjustments to the cost of living and Hilary Clinton is proposing to raise the taxable wage base. Advisers in their own parties are advising them of their strategy in regards to the important topic of Social Security, so stay tuned as the election race continues as viewpoints could change.
Bruce writes: I am very interested in this topic since retirement planning is my focus. What is the best source to learn more about all the ins and outs of Social Security? Are there classes offered or books available beside the ssa.org website?
Bruce, thank you for your interest. Please call our retirement sales desk at 1-800-370-1519 and they can send you a Social Security kit with alot of information on the topic.
Marlyn asks: If a dependent spouse is older than the primary wage earner, does she have to wait until her husband is receiving benefits before she can draw hers?
Yes, she would have to wait until her husband is receiving benefits before she could draw hers.
Richard asks: if an individual over 62 is receiving benefits for minor children, how long will those benefits last and how are they calculated?
The calculation is complex and depends on various factors such as how many children the individual has, the workers insured amount and the family maximum, which can be up to 50% of income or a lower minimal amount. Generally, the benefit lasts until age of majority.
Bill inquires: JUST TO CLARIFY: WHEN A WORKER BEGINS COLLECTING SS BENEFITS, BOTH THE WORKER AND THE SPOUSE WILL COLLECT PAYMENTS CONCURRENTLY (100% FOR WORKER AND 50% FOR THE SPOUSE)?
The worker's benefit is based on their income, or if the spouse is working and if they can get their benefit as a dependent of theirs and the worked would then receive whichever option is greater.
Judith writes:
If the worker dies at the spouse's age 60, can the spouse take social security as a survivor then and then starting taking her (the spouse's) own social security at age 66, assuming this increases the payment to the survivor then?
Yes, this is similar to the question above, whichever benefit is greater.
Sharon asks: How does the income of a spouse, who continues working, affect the social security benefits of the other spouse who retires early?
It has no effect, as the benefit is looked at individually.
Anita wants to know: Do you know of any proposals in Congress to allow some portion of our FICA taxes to be tax deductible? Do you agree that counter opposition to the inevitable increases down the road?
There is no legitimate legislation out there on this topic today.
abc writes: What is the most likely solution to the Social Security shortfall?
The likely solution to the issue is a reduction in benefits or an increase in taxes, or a combination of the two.
Rhonda asks: Where can I go to get more information on the issue discussed of illegals receiving Social Security benefits?
A good source of information might be the 2008 Summary Report which is issued by the Social Security and Medicare Board of Trustees which is available online. Use any internet search engine and it should pull up.
Christine writes with a spousal benefit question:
Example situation: When you have two wage earners one a high income earner, the other a modest earner. The modest worker retires early, before NRA, and the high income earner continues to work until 70.
If the modest worker takes her benefit at retirement, again pre NRA, will she be eligible for an increase in a benefit when the high wage earner retires - in this situation at 70.
The only benefit the low earner would be eligible for is a dependent benefit or a survivor benefit if available.
Please let us know if you have any additional questions and if you would like copies of Invesco Aim's Social Security materials, please call our sales desk at 1-800-370-1519.